The principles behind the fee structure of the Labrusca Global Fund are the following:

1. Absolute-return focus. Since our aim is obtaining the highest possible risk-adjusted absolute return, we will not be rewarded for relative performance (performing better than an equity index).

2. A variable fee. At Labrusca Family Office we put a lot pride in our results. Good results are rewards by themselves. However, we believe everyone is better off with fund managers having economic incentives to create a highest absolute long term risk-adjusted return and economic penalty of non-payment for work done when not achieving it. All portfolio managers of Labrusca are stakeholders in the firm, so long term results are in focus.

3. High Watermark. Clearly, there are advantages and disadvantages with a high watermark. The advantages are that investors will not be charged a variable success fee more than once for value creation above the benchmark during a certain time frame. It also gives the portfolio managers an incentive to manage risk. The disadvantages are that in years with negative returns, the portfolio managers might feel pressure to increase risk to get above the watermark. In addition, there are risks of higher manager turnover or that funds close down if the catch-up to the watermark seems too big (2008 gave proof to that). We don’t believe it is likely with our long term commitment and partnership structure to experience such outcomes. Nonetheless, we have chosen a high watermark to avoid some disadvantages.

4. Size differentiation. As opposed to certain Scandinavian tax-models, we find it only natural that those who invest larger amounts in our fund should be charged a smaller percentage fee, as their overall absolute contribution is greater.

5. Equality. All investors pay the fees stated, no more no less, including the owners and employees at Labrusca Family Office.